Is the new summary box for savings accounts working?

New FCA rules mean that savings providers must outline their products in a ‘summary box’. Is it helping customers?

Late last year, the FCA introduced a new mandatory ‘summary box’ for savings providers.

No one was doing a perfect job at the time, but some providers were getting there.

Is the new rule now restricting their ability to communicate clearly?

The new requirement

Savings summary boxes follow a specific Q&A format laid out
in the FCA's banking rulebook. There are a fixed set of questions, and certain information must be provided as a response to each of these.

Each firm must provide information about their product in
“clear, easily understandable language and in a prominent way.”

This all sounds fine in principle. The problem is that the prescribed
format isn't quite spot on. But firms have no wriggle room to make improvements under the current rules.

What are the problems?

The summary box is fairly long once all the required information has been packed into it. This has the unfortunate side
effect of ‘burying’ some important information quite far down the page.

And the questions don’t always match up with the content which has to be supplied as a response.

For example, under the heading ‘Can I withdraw money?’ companies must
explain any restrictions or consequences, such as fees, for taking
money out of the account. That’s useful information to have, and it seems appropriate to include it in that section.

For fixed-term savings accounts, this section also needs to include an explanation as to what happens
to the money at the end of the fixed term. But 'Can I withdraw money?' doesn't really relate to that.

‘What happens to my money after the fixed term?’ could be included as
a separate question for fixed term accounts, and would make far more sense.

The same goes for
questions like ‘Can I make further deposits?’ – the answer to which is,
for now, trapped under the heading ‘What might the future balance be?’

Clear and understandable language

Some organisations are still doing a better job than others at using clear language:

“If there is insufficient earned interest to cover the early access
charge then the charge will be taken from the funds in the account.”

That's from Nationwide's new summary box. It probably doesn’t fulfil the ‘clear and understandable’ language criteria. It's quite convoluted – and very formal.

The new rules are clearly geared towards making products easier for
customers to understand. To make that a reality, banks and building
societies also need to be making an effort to change the way they talk to their customers.

What now?

These summary boxes are not optional. But that doesn’t mean providers aren’t
allowed to also supply key information in other ways. Currently, companies are looking to be in step with the new regulation – which means summary boxes are front and centre, at the expense of clarity at times.

The idea itself isn’t necessarily a bad one. But some tweaks are needed, and perhaps firms could be given a bit of leeway with the format, to make
sure that these boxes are genuinely helpful for
customers.